Recently, both the US Department of Agriculture and the Chinese Ministry of Agriculture and Rural Affairs have predicted that China will reduce soybean imports in the 2018/2019 planting season. The Ministry of Agriculture and Rural Affairs of China also stated: "After the import tariffs take effect, the global soybean trade pattern is facing a rebalancing."
For many years, China has imported soybeans with an amazing "appetite". However, this rapid momentum that lasted for several years is about to come to an abrupt end.
The Ministry of Agriculture and Rural Affairs last week lowered its 2018/19 crop annual soybean import estimate to 93.85 million tons, a reduction of 1.8 million tons from last month's forecast. This shows that the Ministry of Agriculture expects soybean imports to decrease by 1.8% year-on-year – this will be the first time imports have decreased since 2004.
On the same day, the US Department of Agriculture said in its monthly global agricultural product supply and demand report that China will import about 95 million tons of soybeans in the 2018/2019 planting season.
And the US Department of Agriculture also predicted in June that China's soybean imports will be further on the basis of 95.54 million tons in 2017, and once again set a new historical record. This means that the department ’s forecast of China ’s soybean imports has been reversed, with a year-on-year decline of 2.1%.
Over the past two decades, 85% of global soybean trade growth has come from China. In its report, the Chinese Ministry of Agriculture predicted that after China imposed a 25% tariff on US soybean imports, the global soybean trade pattern will face a rebalancing.
The Ministry of Agriculture and Rural Affairs of China also predicts that the cost of imported soybeans will continue to increase. It is estimated that the average post-tax median price will be 3300-3500 yuan per ton, up 100 yuan from last month's forecast. Previously, CCTV said that after the 25% tariff on US soybean imports took effect on July 6, the cost of US soybean imports increased by 700-800 yuan / ton, which is about 300 yuan higher than that of Brazil.
It is worth noting that at present, domestic and foreign soybean prices will still show a significant upside down pattern. The Ministry of Agriculture and Rural Affairs of China predicts that due to the reduction in import volume and the increase in import costs, the demand for domestically produced soybeans will be better.
China is highly dependent on imported soybeans and is the world's largest importer, buying almost 60% of the soybeans on the global market. In 2017, the three major source countries for imported soybeans were still Brazil, the United States and Argentina. Soybean was the largest agricultural product exported by the United States to China last year, with an export value of US $ 12 billion.
At the same time, the U.S. Department of Agriculture also lowered its U.S. soybean export estimates for the 2018-19 planting year, and expected soybean carry-over inventories to hit a record high of 580 million bushels, thus raising the U.S. soybean reserve forecast for 2019 by 51 %.
The China National Cereals and Oils Center said that this year the US soybean planting area reached 36.24 million hectares, the second highest level in history, growing better than normal, and it is expected that output will exceed 121 million tons, setting a record high in history.
China adjusts soybean imports
CCTV said that the senior economist of the National Grain and Oil Information Center said that China's purchase of US soybeans has been gradually reduced since June. China's soybean imports will shift to Brazil, Argentina, Canada, Russia and other countries.
In an interview with CCTV on Wednesday, Wang Liaowei, a senior economist at the National Cereals and Oils Information Center, said that as of June 28, China had no new purchases of US soybeans for 3 weeks, and a total of 615,000 tons of US soybean orders were cancelled during the same period.
Lu Xiaodong, deputy general manager of China National Grain Management Corporation, said in an interview with CCTV on Thursday that China can fully meet the state ’s soybean demand without importing from the United States, because "China can participate from South America State imports to meet the demand of the State Reserve soybeans. "
The State Council Tariff Tariff Commission issued a notice at the end of last month, starting from July 1st, reducing the import tariffs of some Asia-Pacific countries, including soybeans, from 3% to zero.
Meidou falls into a bear market
The USDA ’s bearish supply report weighed on the initial price of US soybean futures. The main CBOT contract fell 1.2% in 1808, hitting a contract low of $ 8.22-1 / 4 per bushel, the lowest level since 2008.
Since mid-April, the US CBOT soybean futures price has fallen by about 21%, entering the technical "bear market" range.
The Dutch ING Group believes that the US soybeans have completely reflected the trade dispute in the price, so there is little room for subsequent decline. The price may be between 8 and 8.7 US dollars per bushel in the next 12 months.
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